Insurance Laws Flashcards
Implied authority
Authority agent is assumed to have in order to transact the business of the insurance for the principal
Expressed authority
An agents power to act on behalf of a principal, explicitly granted by an agreement between the agent and principal
Apparent authority
A reasonable person would understand that an agent had authority to act.
Principal is bound by the agents actions, even if the agent had NO actual authority
Who is a Broker?
An independent agent who represents the buyer, rather then the IC
Finds the buyer the best policy by comparison shopping
What is Fiducary
A person in a position of financial trust and confidence
Duties to the insured
- Act in their best interests and comply with all laws
- evaluate the clients insurance needs and make them a proper recommendations with regard to coverage
Duty to the insurer
- Act in accordance to agency contract
- Must account for all premiums agent is authorized to collect
Elements of legal contract - CLOAC
C- Competent parties
L- Legal objective
O & A- Offer of acceptance
C- Consideration = $$$
Unilateral contract
Exchange of an act for a promise
- only the insurer is legally bound to do anything once a policy is in place
Contract of adhesion
The contract must be accepted by the insured exactly as written by the company - insured can “take it or leave it”
Aleatory contract
Unequal exchanges between the parties
Conditional contract
Contract may be voided if the policy conditions are not met
Conditions = ground rules
Personal contract
Personal agreement between the insured and the insurer (ownership cannot be changed)
Representations
A statement believed to be true to the best of ones knowledge
Concealment
- Intentional withholding of known information
- insurer may be able to void contract if they can prove concealment
